The price of benchmark Brent North Sea crude oil for delivery in October jumped 1.09 dollars to 42.56 dollars per barrel in late afternoon trading in London.

New York's reference light sweet crude for October delivery gained 1.10 dollars to 45.10 dollars per barrel in early deals.

An Iraqi oil official told AFP that the strategic northern Iraqi oil pipeline from Kirkuk to the Turkish Mediterranean port of Ceyhan was ablaze after a huge explosion, which had affected oil exports.

"We have received news of a huge explosion, seriously affecting the pumping of oil," said Northern Oil Company engineer Aidin Abdullah.

Prices had already been rising fast prior to news of the explosion on concerns over Yukos and Hurricane Frances.

"It seems that jitters about Yukos have caused the surge," said one trader in London before news of the blast in Iraq.

A Moscow court had Tuesday granted a state prosecutor's request "to seize all resources in accounts belonging to the main producing divisions of the Yukos oil company", the company said in a statement.

"Fuel delivery in more than 40 regions of the Russian Federation will be threatened," it added, without providing details.

The oil group faces claims for billions of dollars in back taxes by the Russian government and its jailed founder Mikhail Khodorkovsky is on trial for tax evasion and fraud.

Some analysts argued that Yukos appeared to be trying to put pressure on the Russian authorities.

"One of the few weapons that Yukos have left to defend itself is to threaten to stop production and say that this legal process against it is going to have wider repercussions," said Commerzbank analyst Jon Rigby.

"But I think oil exports from Russia are unlikely to be impacted significantly as a result."

The market was also keeping a close watch on Hurricane Frances, traders said.

The hurricane lashed the Turks and Caicos and the Bahamas as it barreled toward Florida, where authorities have declared a state of emergency.

"Dangerous Category Four Frances (is) pounding the southeast Bahamas, ... heading toward the central Bahamas," said forecaster Lixion Avila of the Miami-based National Hurricane Center (NHC).

Oil prices had already jumped by nearly two dollars a barrel in New York on Wednesday after an announcement that US crude stocks had dropped for the fifth straight week raised supply worries.

Previously prices had plunged by more than 10 percent in little over a week as worries about supply threats in Iraq, Russia and Venezuela eased.

"I think the market was overdone on Monday and Tuesday. It got sold-off too quickly," said Robert Laughlin, a trader at GNI-Man Financial.

"There are still a lot of problems around and a lot of demand for oil as shown in the stocks figures. I think too many people thought the bubble had burst and prices were going to come down, but that is not the case."

Crude prices had dropped during seven of the previous eight sessions until Wednesday's U-turn, after marking a record of 49.40 dollars on August 20.

US commercial crude inventories slid by 4.2 million barrels to 287.1 million in the week ending August 27, the US Energy Department said.

International Energy Agency chief Claude Mandil meanwhile called on oil producing countries to invest more in infrastructure so they can boost output.

"We need much more investment in the oil sector globally, among listed companies and state enterprises. The demand for oil is rising more quickly than anticipated," he told the Financial Times Deutschland newspaper.

"The capacity for additional production among oil producing countries is extremely weak, far lower that in the 1990s," he said.

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